Friday, May 1, 2015

Tim Knight On the Startup Bubble of "Secret" and ""

Tim Knight is a bear in Palo Alto and his observations on Bubble v2 are great. This is about the Secret app that just shut down:

in exchange for 18 months of work that resulted in a completely failed endeavor, he and his buddy scored $6 million (out of which he bought himself a Ferrari), on top of whatever handsome salaries they felt they deserved.
So am I bitter about this? Well, no. Bitter isn’t the right word. I’d say I’m simply…….pissed off. Because my own high-tech start-up, Prophet, is something I worked thirteen years to build, and when I finally sold it (for all of $8 million), it was a growing, profitable firm with happy employees, fantastic products, and a very satisfied buyer. Its products are in use to this day, ten years hence. Prophet, you see, wasn’t an overly-funded clown-show where we blew through the cash and just decided we were all fuck-ups and might as well close the place down swiftly. Oh, and pocket the cash.
The quantity of these dim-witted, overly-funded outfits that are going to enter bankruptcy is going to explode over the next few years (Clinkle is bound to be a likely contender…….) was another great one that he predicted would go to zero.
So, in both a literal and figurative sense, Color has been rearranging chairs, Titanic-style.
What they did with $41 million is beyond me. Congrats to Sequoia Capital on this amazing investment.
It's too bad you can't short these startups.


Anonymous said...

Back from Vegas recently- I have never seen so many tech guys with escorts walking around at clubs and getting bottle service- much more noticeable than from my visit not too long ago in summer 2014... this can't last and has to be a useful indicator of some sort. There is nothing wrong with enjoying the good life, but there was something unsustainable about their behavior that struck me. I'm sure the Vegas economy appreciates their generosity though (maybe this is where a lot of the money being raised is ending up???).

whydibuy said...

I'm shocked. Shocked, I tell ya.
So all start up ventures do not succeed. Who would have thunk it?
The bears are now trying to use the common American enterprise reality that not all ventures pan out as some kind of proof that the end is near.
Its not. This is just everyday business in the start up corner of finance. Financiers don't mind the failures because the winners are so huge. But if you want to slant everything as a harbinger of doom, be my guest. We bulls love that wall of worry you gloomers build higher day by day.

High Plateau Drifter said...

"We bulls love that wall of worry you gloomers build higher day by day."

Us gloomers aren't building anything right now. It is you bulls who are building the profit opportunity for us buy driving stocks higher and higher. You will eventually find the wall.

This bear is sitting on cash waiting for you bulls to exhaust yourselves.